New Zealand dairy co-op Fonterra has announced a further cut to its 2014/2015 milk price forecast, dropping from $6 to $5.30 per kg of milk solids. At the prevailing exchange rate (1.59) and corrected for their higher fat percentages, it is approximately 23.4 c/litre in Irish milk terms.

“The market is currently influenced by strong milk production globally, the impact of Russia’s ban on the importation of dairy products, and the levels of inventory in China,” chairman John Wilson said.

Irish dairy co-op chief executives are reluctant to forecast 2015 Irish milk price, but an average of 30 cent per litre has been mentioned. There is optimism that the market could improve in the second quarter of next year. Dutch Dairy Board prices showed marginal price increases yesterday – their first rise since June.

One positive is that US butter prices continued to increase in August. Prices are 70% and 30% higher than Oceania and EU. The combination of strong domestic demand and low US butter stocks are placing upward pressure on US prices.

Last week’s USA production data showed milk output in August was 2.6% higher than the same month last year. Higher growth was expected, given record farmgate milk price and cheap feed.

Meanwhile, ICOS president Bertie O’Leary expressed his disappointment at the EU Commission’s decision to close the Private Storage Aid Scheme for Cheese, which was introduced only a number of weeks ago in the wake of the Russian trade embargo.

The Commission states that the scheme was closed due to “the number of applications from countries not directly affected by the Russian ban, and that, as such, it did not represent an efficient use of EU funds”.

Figures released by the EU Commission yesterday showed that 7,109t of the 100,464t of cheese submitted to the scheme had come from Ireland.